end-of-quarter report identifying 2021 as the fourth-costliest active natural catastrophe year on record, with upwards of $111 billion of insured losses incurred by natural disasters over the course of the year. Further to this, the report noted that Q1 2022 had evinced a similarly “volatile environment for the sector”. Speciality insurance losses are expected to run above $16 billion alone, with billions more likely to be incurred following European winter storms, Australian floods, Texan wildfires and the Fukushima earthquake. However, the global ratings agency urged against panic. “While these aggregate losses are material and the global reinsurance sector will take a share of them, we do not believe the sector is immediately facing a capital threat when comparing 2022 to annual natural catastrophe budgets and other historical large tail events,” it said. As with all things, the full material impact of this year’s disasters will not be known before they have arrived, but ought to be kept in mind nonetheless on the off-chance that the first quarter sets a precedent for the remaining months. portending a potential shift in pricing, but for the moment the market remains in a holding pattern with 5% to 10% price increases. Another facet of the market under scrutiny this year is employee practices liability insurance (EPLI). 2022 may prove to be a minor watershed year for claims as antipandemic measures ease and workers return to offices. Disputes relating to vaccine mandates, lockdown layoffs and rehiring are expected in some areas. Global Threats and Large Losses It is of course difficult to forget that global business is still bearing the fallout from several seismic events, the most obvious being the COVID-19 pandemic and the outbreak of the Russia-Ukraine war. Beyond these, however, an uncommonly high number of natural disasters incurring large losses are expected to harden reinsurance throughout 2022. S&P Global Ratings has released an Professional Lines andHardMarkets Building on the trends previously identified, both D&O and cyber insurance have not exhibited the same stability as most other professional line rates from 2021 to 2022. Cyber insurance, while having shown steady rate increases for the past three years, has not yet shown a significant improvement in profitability allowing for decreases. While insureds are improving their security posture, the rise of new risks has created ambiguities that are difficult to insure. On page 66, Dennys Zimmerman offers a deeper look at the cyber insurance market and how it is shaping up this year. As noted in Lawyer Monthly’s M&A and IPO round-ups this year, SPAC mergers have sharply dropped in popularity since their 2021 heyday. The D&O insurance market for both SPAC mergers and IPOs more broadly remains optimistic, with rates for excess capacity growing more competitive. It must also be kept in mind that the SEC has signalled a greater focus on SPACs, 61 MAY 2022 WWW.LAWYER-MONTHLY.COM It is of course difficult to forget that global business is still bearing the fallout fromseveral seismic events, themost obvious being the COVID-19 pandemic and the outbreak of the Russia-Ukrainewar.
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